Traders struggled to gauge the Fed's next move - a challenge compounded ​by Warsh's retreat from offering forward guidance.

Markets are at a delicate juncture, with steep declines in the shares of some of the biggest winners of the AI boom spooking investors. South Korea's KOSPI fell 1.23% to end its third consecutive day in the red.

"We don't think the AI story is over by any means, but clearly there's scope for bumps along the way," said Sanjiv Tumkur, head of equity research at Rathbones.

Earnings from ‌Microsoft and Meta reinforced the view that investors ⁠were looking for signs that the costly AI buildout is starting to pay off.

Microsoft shares rose 9.02% in premarket trading after the tech major said it expects to keep generating cash through fiscal 2027. But Meta ⁠tumbled 8.34% following earnings that reflected the strain of its costly AI bets.

Microsoft had hit "the jet stream while Meta is still building the runway", Jefferies analysts wrote.

Futures tracking the tech-heavy Nasdaq 100 rose 1.28%, while S&P 500 and Dow futures gained 0.59% and 0.36%, respectively.

Europe's STOXX 600 benchmark rose 0.58%. ​The MSCI ​All Country World Price index inched 0.22% higher after two sessions of ​losses.

GREY SKIES AHEAD

The make-or-break week for markets has been ‌complicated by renewed Middle East tensions, making it harder for investors to gauge the inflationary implications of rising oil prices.

A drop in Brent crude last month helped keep June inflation contained, but oil prices have risen since then to above $90 a barrel. [O/R]

Three Fed policymakers dissented in favour of a rate hike on Wednesday, prompting some analysts to question if Warsh's "good family fight" may become more difficult to navigate should inflation pressures linger.

"As the Fed heads into the second half of the year... we expect (it) will be faced with the reality of inflation as ‌a persistent issue," strategists at RBC Economics wrote.

The rate hold could buy the ​central bank time until its next meeting in September, allowing it to parse through ​two more inflation reports. But the odds of a hike ​at that meeting have jumped to 63.2% from 57.3% a week ago, according to the CME FedWatch tool.